Aetna's Accountable Care Chief: Tough Transition Ahead

Online integration in industries like banking is "just math" compared to what healthcare has to do, says Aetna's accountable care leader, Charles Kennedy.

The rise of accountable care organizations (ACOs) designed to reward quality over quantity of care delivered is being propelled by laws and regulations but is also being helped along by leaders such as Aetna's Charles Kennedy.

Kennedy, who has both an MD and an MBA, is CEO of the Accountable Care Solutions business unit that Aetna established in 2011. Like the related Healthagen software business Aetna established, Accountable Care Solutions aims to deliver products and services that healthcare providers will be able to use across their businesses, including the business they do with payers other than Aetna. Aetna acquired Healthagen, developer of the iTriage mobile health app, in 2011 and has added a number of consumer and professional healthcare software products to its portfolio.

The goal of the accountable care business Kennedy runs is to use those software products, in conjunction with consulting services, to help provider organizations organize and operate ACOs, one of the main vehicles for shifting the healthcare industry away from providers billing for every service provided -- a pattern associated with excess utilization and unnecessary expense. Instead, ACOs aim to align financial incentives with keeping the most people healthy for the lowest cost, putting more emphasis on preventative care and coordination of care among providers.

Citing studies of waste in the healthcare system, Kennedy said as much as 50% of the care delivered by healthcare providers is not backed by evidence of whether the drug or treatment administered will help or hurt the patient. Given that, the best way to make healthcare affordable is "by eliminating the care that has no value," Kennedy said. "The question is, how do you do that in a way that allows delivery systems to be financially stable?"

Accountable Care Solutions caters mostly to hospitals, and many of them have been sustaining their businesses with what is now being defined as "unnecessary" care, Kennedy said. In a fee-for-service world, a hospital that cut back on the number of patients admitted (unnecessarily or not) would tend to be "punished financially and possibly helping my competitor down the street."